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Ford Nears Decision on Lincoln MKT Show Car

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March 17, 2008

In fits and starts, the Ford Motor Co. is pushing to revive the Lincoln Brand with a range of new models that can build on the momentum of the MKZ sedan and MKX crossover. That pair of products has helped Ford's erstwhile luxury nameplate reverse a long slide in sales. However, keeping the product renaissance moving forward is proving difficult. Plans for Lincoln MKT, which would be based off the same underpinnings as the new Ford Flex, are currently under review inside the Ford bureaucracy but still haven't gotten the final sign off from the company's top executives, sources inside the company said last week.

Given the slowdown in sales and the new worries about credit and recession sweeping through the economy, the issue, not surprisingly is money. Ford's product planners and executives are not sure they can justify the new investment required to bring the Lincoln MKT to market, sources said. Estimates put the project’s cost close to $1 billion, even though the hard tooling for the Flex – upon which the MKT is based – is already in place. Ford also is in the midst of a huge push to bring more small vehicles to market and the debate centers on what's the most practical investment at this point - small cars for the Blue Oval brand or another luxury model for Lincoln.

The debate is far from one-sided; the Lincoln MKT Concept, unveiled in January at the North American International Auto Show, has a lot of partisans inside the company. "Everybody loved that interior," noted one Ford official. In fact, Ford thought so much of the concept vehicle, the automaker also showed it off earlier this month during the Architectural Digest magazine's Home Design Show in New York, which always attracts the kind of affluent consumers usually partial to Japanese and German Luxury cars.

Not everything in the concept MKT would make into a production vehicle, most notably the “business jet” interior, but Ford has been growing more adept at turning out pleasing interiors and many of the features such as executive-style, first-class chairs with rear seat footrests, soothing tone-on-colors, ambient lighting and flexible storage. The sculpted door handles and crystal-inspired center console that runs the entire length of the vehicle's interior might become problematic if Ford decided to move ahead with the project under a tight budget.

One factor working both for and against the new Lincoln model is the free-fall of the U.S. dollar. The continuing erosion of the U.S. dollar versus both the euro and the yen is setting the stage for an increase in the prices of a lot of German and Japanese luxury vehicles. Such price hikes would play in Lincoln's favor if it had the right mix of vehicles available out in the showroom. At the same time, the cost of renovating the assembly plant, which happens to be in Canada, also is going up. Complicating matters, Ford has to figure out a way to squeeze some Volvo production into one of its American car or crossover plants, so the Swedish automaker can offset the impact of increasingly lopsided exchange rates.

A decision on the MKT is also worth watching for because it could offer a case study of the interaction inside the company's new executive team. Ford recruited Jim Farley as group executive for marketing and sales, to remake both Ford's product line and the company's image – aggressively and quickly. But the Ford family also brought in Alan Mulally, the innately cautious aircraft engineer, to serve as chief executive to make sure the company doesn't get into deeper financial trouble. How they reconcile their natural instincts could provide a good indication of Ford’s future strategy. By Joseph Szczesny